Managing invoices manually is a recipe for missed payment deadlines and costly errors. Yet, for many businesses, digging through piles of paperwork to collect and verify invoice information is still considered day-to-day business.
Unfortunately, today’s business world has become relatively fast-paced. Efficiency and accuracy are now the cornerstones of success. An area where this principle strongly applies is in financial management and, precisely, under invoice processing. Gone are the days when you could get away with missed payments and errors in financial records. Today, competitors are automating invoice processing to streamline tasks and become more time-efficient. If you aren’t toeing the line, there is a high chance of getting left behind.
What is Automated Invoice Processing?
Automated invoice processing (also automated invoicing) refers to the use of specialised software and technology to manage the receipt and payment of vendor bills. As one of the key functions of accounts payable automation, its main purpose is to eliminate the bottlenecks associated with manual invoicing, such as high costs and time inefficiency. But how does it work?
An automated invoicing system operates in four major steps, including the following:
Data Capturing
When an invoice is issued from a vendor, the system extracts key details such as invoice number and items supplied.
Data Verification
The next step is the verification of the said details. The system will verify the data against an available set of financial records – mainly purchase orders and contracts – to confirm that all information is in order. Should anything be amiss (perhaps the totals are wrong or there could be a duplicate invoice), the system notifies the finance team, allowing them to take the necessary actions.
Approval Workflow
The third step in this process is the approval of invoices. Now, the automated invoicing system does not automatically approve the invoices. However, they have a framework that routes invoices to the correct approvers based on designated configuration. For instance, it can route invoices directly to the finance manager’s desk for quick review and approval. That reduces the number of individuals the invoice has to go through before it reaches the manager’s desk, effectively accelerating the approval process.
Payment Processing
Once the approvals are complete, the system automatically schedules payments based on vendor agreements and due dates. The best part is that it can integrate with your accounting systems to ensure reconciliation in every transaction, thereby improving the overall accuracy of your financial records.
Why You Should Automate Invoice Processing
Improved Financial Decision-Making
One of the primary reasons businesses are implementing automation in invoice processing is to enhance their financial decision-making process. Automation gives your finance team access to up-to-date and accurate information on liabilities, expenses and cash flow.
Such visibility makes it easier for decision-makers to assess the financial position, project cash flow accurately and identify spending patterns for better budgeting. The invoice data, in a way, becomes a strategic financial resource for the company.
Stronger Relationships With Supplies
Although its main purpose is to improve financial management, automating invoice processing also promotes better relationships with suppliers. Every supplier wants to have a customer who pays promptly and reliably. And that can be realised through the automation of invoice processing.
Some automation systems even flag early payment opportunities, allowing your business to take advantage of supplier discounts. That creates a win-win situation, where your supplier is happy with early payment and you pay a lower amount for the items supplied.
Conclusion
Automated invoice processing seeks to eliminate major bottlenecks associated with manual invoice processing. It streamlines the process by automating tasks like data extraction, verification, approval routing and payment scheduling. Automate invoicing today and reduce costs, improve decision-making and foster stronger relationships with your suppliers.
David Prior
David Prior is the editor of Today News, responsible for the overall editorial strategy. He is an NCTJ-qualified journalist with over 20 years’ experience, and is also editor of the award-winning hyperlocal news title Altrincham Today. His LinkedIn profile is here.
